Allegiant, Southwest Post Profits
July 25 2008
Southwest’s profitability has been well-publicized, and they’ve had another fine quarter due to them running a fantastic operation, and their oft-discussed fuel hedges. Well done.
Allegiant, which I speak of frequently, also turned a tidy profit and got almost no credit for it. Their management team has built an impressive operation around a tight strategy: fly leisure travelers from tertiary cities a couple of times a week to sun destinations, and upsell everything. And this works. Really well. Their planes were 94% full in June, and 90% full for the quarter. Their non-air revenue per passenger hit almost $28 (JetBlue is about $8). They are basically a seller of travel products (hotels, show tickets, etc) that happen to run an airline. Oh, and they manage to do that flying old MD-80s with no fuel hedges. Incredibly impressive.
(I own a small number of shares in Allegiant…)
charlie on 25 Jul 2008 at 9:19 am #
Jared, do you know how the majors book the revenue from selling vacations and cars from their websites? It strikes me that they might pull in a lot there, although, to be honest, I’ve never booked a hotel room or vacation that way.
upsell
RE other: I flew AA last week for the first time in two years. Man, those flight attendants are old. $5 for a beer is not a bad value — but their little paid snacks are so sad looking.
charlie on 25 Jul 2008 at 9:26 am #
right, and I meant to send you this link as well:
http://www.chrishayes.org/blog/2008/jul/23/why-airline-travel-sux-big-air-responds/
Jared on 25 Jul 2008 at 2:15 pm #
The majors book a tiny amount of revenue from their hotel sales. Allegiant sells a huge amount of hotel rooms in Vegas b/c that’s primarily where they fly.